Moving Forward: Sustaining Growth in the Cannabis IndustryThe cannabis industry is set to reach new heights, beyond the pandemic.
The legal cannabis industry employed over 200,000 people in the USA and became the number one “unofficial” job provider within less than five years in the world’s most industrialized nation. Due to the increasing legislation in some states, leading cannabis brands emerged as well as cutting edge technology companies — driving this new industry forward. As the coronavirus stumbled upon us, it’s essential to rethink the state of the emerging cannabis industry. Since most sectors are touched, marijuana is not excluded from this global threat. So what could happen to cannabis businesses moving forward amid the recession? Let’s explore the current risks and opportunities triggered by the global pandemic — and how it affects a new market, already suffering from the lack of support from the federal government.
High Demand for Cannabis Products
First of all, amid the COVID-19 disaster, plenty of opportunities arose for cannabis producers. Leafly reported an increase in legal marijuana sales, especially since medical cannabis was considered “essential” during the crisis. Within just a month, sales surged by 51% in California alone. Even if the pandemic delays legalization in some states, such as Missouri or New York, overall cannabis producers still benefited from the coronavirus.
Second, as the “stay-at-home” policy around the globe imposed a shift in consumer behavior, legal marijuana sales jumped. If adult-use of cannabis was restricted, dispensaries resorted to the “curbside” market — ensuring cannabis retailers the possibility to stay in business during the pandemic. The rise in deliveries is predicted to remain high, according to Zachary Pitts, CEO of the Californian delivery company Ganja Goddess.
Third, the online market has taken new heights with a growing demand for CBD and other cannabis products, resulting in a spike of e-commerce sales. Companies such as Eaze or Greenrush have reported unprecedented growth for delivery of cannabis-related products — weed, edibles, CBD, THC, and more. Overall, industry leaders share that recreational marijuana has been doing great — with or without the pandemic.
Threats Softened by Opportunities
Threat 1: Lack of federal support
The new industry has experienced some threats — mostly due to the lack of legalization on the federal level. For instance, some smaller cannabis companies may not have access to the emergency federal business relief provided by the government. Second, most cannabis startups will increasingly lack the support from investors during the crisis, and we may even see some cannabis brands disappearing from the market.
Threat 2: Lay-offs due to the pandemic
On top of it, the pandemic has added a new layer of difficulties for young cannabis businesses. Following the social distancing rules, some companies had to lay off their employees like OrgaiGram, a Canadian-licensed producer of medicinal and recreational cannabis. Some other cannabis businesses had to shut down their operations, as seen in the case of Canopy Growth, which closed 23 stores.
Opportunity 1: Global demand for cannabis products
Despite these discouraging facts, we notice tremendous opportunities for cannabis businesses to stay ahead and thrive, even with the forthcoming recession. This is mostly due that legalization is increasing in most states and that the global demand for cannabis-related products keeps growing at a fast rate. For example, Germany, which legalized the pot market three years ago, is currently seeing a boom for legal marijuana.
Opportunity 2: The cannabis industry as the economy’s recovery driver
As of mid-may 2020, over 35 million people in the USA have applied for unemployment benefits. As the legal cannabis industry is set to grow exponentially — to be worth $29,7 billion by 2025 — government officials are looking at marijuana as a viable economy booster, according to the Motley Fool. With the full federal legalization, we could even expect such figures to triple, offering tremendous job opportunities in the states and abroad.
Opportunity 3: New legislation for the entire cannabis industry
Furthermore, the SAFE Banking Act —proposed legislation on cannabis revenues —was pushed forward by cannabis proponents in the USA. Last April 2020 was introduced the Emergency Cannabis Small Business Health and Safety Act — to obtain economic relief from the federal state for cannabis businesses. Such a fund would help cannabis retailers and e-commerce providers to benefit from financial support from the government.
Will the cannabis industry recover and move forward?
The answer is undoubtedly, “yes.” Unlike many other industries where jobs shut down, and businesses closed, the cannabis market is experiencing a colossal boom, driven by e-commerce sales and more favorable legislation.